Square‘s shares jumped 6 percent on Wednesday (Aug. 29) after an analyst raised its price on the company’s stock to $100 from $75.
Square, which is run by run by Twitter CEO Jack Dorsey, has already seen a 227 percent increase year over year, with shares up more than 136 percent in 2018. Now, Guggenheim Analyst Jeff Cantwell has revealed that he sees revenue coming in significantly higher than the Street’s current consensus. “We expect a strong rate of revenue growth for SQ, which should drive further share price appreciation,” he wrote in a note to clients, according to CNBC.
After naming Square its “best idea” two years ago, Guggenheim added that Square has moved beyond its “micro-merchant” roots to focus on selling value-added services. With that in mind, the analyst predicts Square will generate “substantially higher” subscription and services-based revenue than previously predicted for the end of 2019 and beyond. In fact, Guggenheim’s estimate is 10 percent above the consensus forecast for adjusted revenue in 2019.
Square already managed to beat Wall Street estimates on both earnings and revenue when second quarter earnings were announced earlier this month.
The company’s adjusted second-quarter earnings came in at 13 cents a share on revenue of $815 million, beating analysts’ forecasts of earnings per share (EPS) of 11 cents and revenue of $774.6 million. That’s 60 percent revenue growth year on year. Transaction-based revenue was also up 30 percent year over year to $625.2 million during Q2, while gross payment volume came in at $21.4 billion — a 30 percent increase over 2017 at the same time.
Square Cash, the platform’s P2P payment service, also reported strong results. Customers spent a total of $250 million with Cash Card, tripling the amount spent in December 2017.
This year has also seen the launch of bitcoin trading through the Square Cash app, with the company reporting that it had generated $37 million in revenue from bitcoin trading via the app. However, Square did not include that figure or bitcoin-related costs in its adjusted revenue.